December 17, 2024
Canada Enterprise Emergency Funding Corporation Sells Air Canada Shares
As mentioned in the 2024 Fall Economic Statement released yesterday, Canada Enterprise Emergency Funding Corp. (“CEEFC”), a wholly owned subsidiary of Canada Development Investment Corp. (“CDEV”), confirms that it sold 21,570,942 Class B Voting Shares of Air Canada at an average price of $25.22 per share, for total proceeds of $544 million. Based on the purchase price of $23.18, this represents a profit of $43.8 million (net of fees). The sale represents a full exit of CEEFC’s equity position in Air Canada.
The shares were initially purchased in April 2021 as part of the financial assistance package provided to Air Canada through the Large Employer Emergency Financing Facility (“LEEFF”), a program established in 2020 under CEEFC to provide large Canadian employers with access to financing to preserve jobs and continue operations as they weathered the economic impacts of the COVID-19 pandemic. CEEFC did not intend to be a long-term owner of the shares.
In March 2020, CDEV was mandated to help construct and implement a loan program to provide emergency financing to large Canadian companies and established CEEFC as a subsidiary. In May 2020, the LEEFF program was launched and made available $7.6 billion in loans to various large Canadian employers between 2020 and 2022.
The support package to Air Canada included approximately $4 billion in loans, plus an additional $1.4 billion loan to finance refunds to eligible customers. In addition, CEEFC purchased $500 million of Class B Voting Shares from Air Canada. CEEFC also received warrants to purchase Air Canada shares in conjunction with its loan commitments. In November 2021, Air Canada withdrew from the $4 billion in facilities that were never accessed, and in January 2022, Air Canada repurchased 7,288,282 warrants from CEEFC for total consideration of $82.2 million. CEEFC still manages approximately $1.273 billion in loans to Air Canada.
Statement from Elizabeth Wademan
“The COVID-19 pandemic impacted all the sectors of our economy. The Government of Canada called on CDEV to leverage its commercial expertise and its ability to act swiftly to create CEEFC and launch the LEEFF program,” said Elizabeth Wademan, President and CEO of CDEV. “This transaction is one of the many ways CDEV serves the diverse commercial interests of our country for the benefit of all Canadians.”
Since the inception of the program, $5.3 billion in loan commitments have been repaid, cancelled, or expired. The LEEFF program has incurred no lending losses to date, and CEEFC continues to monitor its portfolio and work with borrowers to ensure that the objectives of the program are met.
The LEEFF program worked as intended by helping sustain the viability of Air Canada and other large employers in the midst of a global pandemic.
For background information, see the following past news releases from CEEFC: